Uh oh

Yesterday, Paul Krugman put on his economist hat and proceeded to scare the hell out of me. This is not a fellow prone to hyperbole or Chicken Little-ism. So when he ends a column on the perilous state of our financial markets thusly,

Nobody wants to put taxpayers on the hook for the financial industry’s follies; we can all hope that, in the end, a bailout won’t be necessary. But hope is not a plan.

you know some pretty bad and potentially very expensive shit is about to go down. Energy costs are high and rising, the housing market is still in freefall, banks are getting wobbly, and even Federal Reserve Bank Presidents are sounding spooked. When well respected economists like Krugman start talking bailout in that kind of environment, we are deep in the weeds. Now all of this may turn itself around, a point Krugman concedes, but from his estimable point of view, things look pretty grim right now and prospect of improvement very much in doubt. Yikes.